Western Sky Financial is one of the most successful payday loan companies currently operating in the U.S. Their confusing loan fee and interest rate combination makes if difficult for most borrowers to know just how bad these loans really are. So exactly what interest rate does Western Sky Financial charge?
The answer is, it depends on how much you borrow. For a $2,600 loan, Western Sky Financial publishes a 139.22% APR. For this loan, you would make 47 payments of $294.46 for a total of $13,839.62. Of course, you are really only getting $2,525 in proceeds, since Western Sky charges a $75 origination fee. My first thought when looking at these rates is, what idiot would apply for such a bad deal? Apparently, many people are willing to throw away their future for a quick loan.
To put this in perspective, imagine buying a $10,000 car using the same terms. You would need a $288 down payment to pay the loan origination fee so that you could borrow the full $10,000 to buy the car. Then you would make 47 payments of $1,166.17 for a total of $55,098. That would be the equivalent of paying for a brand new BMW X5 yet driving a stripped down Nissan Versa. Nothing against the Versa, but do you really want to pay $55,000 for a cheap subcompact?
Considering these staggering rates, should you consider taking out their lower loan amount? It has even worse terms! Instead of a $75 fee, the $1,500 loan product carries a $500 origination fee. You only receive $1,000 on a $1,500 loan! Furthermore, the APR on this loan is a whopping 194.70% APR.
Using these terms on a $10,000 car loan looks far worse. First you would need a $5,000 down payment to pay the loan origination fee on a $10,000 loan (yes you read that correctly). Next you would need to make 24 monthly payments of $1,668.22 for a total of $40,037. Don’t forget about the $5,000 down payment you made, raising the total to $45,037 paid for a $10,000 car over 2 years. That same purchase with excellent credit would have cost you less than $10,500 over 2 years.
The terms of loans offered by Western Sky Financial are very transparent. Yet, most people who take out these loans fail to see just how bad these rates really are. Even the blunt disclosure on their television commercial that “It’s not cheap” is a fair warning that you are about to steer down a rocky path. However, you should be aware that it is not even a rocky path so much as it is driving off a cliff.
If after reading this article you decide to take out loans with interest rates that are as high as this lender charges, then you deserve the financial nightmare that will follow. Our job is to help you avoid making another bad mistake, but even our hands are tied if you deliberately try to ruin your life. Still, we will not tell you “I told you so.” Instead, you can expect the counselors at Debtors Unite to be understanding and work with you to remedy the damage.
If you have not taken out the loan, please do not do so. We can help you find better options for your financial needs. If you did accept the loan, then we can help you review your situation to determine what steps you need to take to get out of your trap.
Don’t expect Western Sky Financial to be able to circumvent state usury laws forever. California, Maryland, South Dakota and West Virginia residents have been protected by their attorneys general who have blocked the lender from doing business in their state. Colorado is trying to block Western Sky Financial, but they have a legal battle to fight first. Don’t wait for your state to protect you. Protect yourself from what is without a doubt a bad deal clouded by smoke and mirrors.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."